Solar power systems are not only relevant to governments and large utilities looking to procure solar power, but to commercial and industrial businesses too. Currently, solar PV systems are the cheapest form of available power, and prices are continuing to drop. It is no wonder that businesses are keen to get on the solar trend. But how, specifically, can industrial businesses benefit from solar power systems?

Solar power systems reduce operating costs

The first and most obvious advantage of installing a solar power system is cost saving. Because solar is such an affordable form of electricity, it is an easy way to reduce operating costs dramatically, particularly for industrial businesses that have consistent loads or run 7 days a week. Two factors make solar PV a good investment for industrial businesses: they instantly reduce operating costs, and the great solar irradiance in South Africa means that they can produce a substantial amount of energy.

How much will a solar PV system save industrial businesses? This largely depends on the type of business, times of power use, and other factors that may influence the cost of the solar electricity generated. For an estimation of how much your business could save with a solar solution, get in touch with us for a free analysis of your electricity tariff.

Solar power systems can reduce diesel costs during load shedding and other power outages

Whilst most solar power systems are grid-tied, meaning that they do not operate during load shedding or other power outages, solar PV can greatly reduce the cost of diesel that might be required for backup power during an outage such as load shedding if this is taken into account whilst designing the system.

Solar PV systems continue to generate power as long as it is light – and this applies to periods of load shedding during the day. However, solar inverters are designed to switch off during a grid outage, which serves as a safety mechanism for personnel that might be working on transmission lines during outages. However, this does not mean that large buildings with solar PV systems do not have options for load shedding. With careful engineering, It is possible to replicate a fake grid-tied scenario to “trick” the solar inverters into staying on.

In order to retrofit a grid-tied solar system to operate during load shedding, two essential steps need to be taken. Firstly, the system needs to be isolated from the grid to prevent any exporting of power that could affect the safety of maintenance personnel. Secondly, a voltage forming source is required, in order to provide a reference voltage and frequency to the solar inverter. With these mechanisms in place, a solar PV system can continue to function seamlessly during load shedding, and thus reduce the costs of diesel and extend the life of on-site generators greatly.

When does it make sense to go entirely off grid? If your business has a weak grid connection and thus has inadequate kVA supply, or it uses diesel roughly 20% of the time, it might be worthwhile to look at the cost-benefits of installing a solar PV microgrid with batteries.

Solar power systems reduce carbon emissions

It goes without saying, but supplementing your business’s electricity supply with solar power is a great way to cut down on carbon emissions. In South Africa, the Carbon Tax was gazetted on 1 June 2019 – meaning that companies will have to take their carbon emissions into account when filing for their tax returns. According to the South African Revenue Service (SARS), the first phase of the carbon tax is R120 per ton of carbon dioxide equivalent emissions, which will increase annually by inflation plus 2% until 2022.

There is a minimum threshold for emissions allowances in order to allow for businesses to transition to cleaner energy and invest in energy efficiency projects, but in general the carbon tax is here to stay – and if avoided, could save the business from tax expenses.

In addition many large companies are heeding their stakeholders’ requests to be more responsible in the way that they do business. Global support of sustainable business practices have increased dramatically over the last few years, particularly in the manufacturing sector. In response to global consumer trends, a group of multinational corporations established the RE100 as a commitment to going 100% renewable energy. One signatory of the RE100 is AB InBev, who recently entered into a multi-tiered Power Purchase Agreement with SOLA to supply their South African Breweries with 8.7 MW solar power systems. For them, the commitment to renewable energy is a no brainer – both in terms of cost savings and their sustainability commitments.

By giving you a better overview, solar power systems can increase operational efficiency

Solar power systems are not only a way to reduce operational costs and lower carbon emissions, but they also provide an opportunity for businesses to evaluate and improve on their energy consumption habits. In order to correctly size a solar PV system, it is important to examine the load of the building, and with this will come insights into your energy consumption patterns. Is it possible to run some of the plant during the day when solar PV is at its cheapest? Are there additional energy efficiency measures that could assist with bringing your load during peak hours down? By encouraging a monthly overview of a business’s energy consumption, solar power systems can help to further energy savings even more.

Solar power carport systems can provide cool, protected parking

Whilst many businesses in South Africa have ample roof space for housing solar power systems, solar power systems are perfect additions to parking lots and convert them into shady, protected carports. Solar carports are very similar to ground-mounted solar systems, but they have the added advantage of not requiring any additional land if a parking lot exists. What is more, because of global demand, these systems are becoming increasingly affordable. The solar carport at Old Mutual head office is an example of how a solar power systems can utilise existing space to create savings for businesses.

If you run an industrial facility you’ll be well aware of the benefits of grid-tied solar PV solutions. Running cheaper and more efficiently than utility-provided power (such as Eskom), solar PV provides substantial savings for industrial facilities as a source of reliable alternative power. However, there are many solar companies purporting the benefits of solar power, and not all facilities managers are able to discern the best option for their facility. The below guide highlights 5 dos and don’ts for facilities managers to ensure that the procurement of solar is an effortless one.

Do: Practice due diligence when procuring solar PV.

Procuring solar PV is a 25 year decision. If chosen correctly, solar PV can provide 25 years of affordable and clean energy to your industrial plant. As such, it is important that the procurement process is done thoroughly and due diligence is practiced. It can be easy to rush into buying solar – particularly when the savings look promising. However, practicing due diligence when procuring solar will pay off in the long run. Start by asking a few simple questions about the solar PV procurement.

What is the objective of the PV system? If you are using it to save money, are you looking to make operational savings through a Power Purchase Agreement, or add value to your building through acquiring a solar asset? Perhaps a bit of both?

If you are looking to buy a solar system outright, do you have sufficient finance to do this? Is a PPA a better option for your business?

What is your typical energy load, and how much of it occurs during the day? Setting up metering can really help in determining what the right sized solar PV system would look like.

Where would you place the solar PV system? Although wheeling arrangements allow power to be generated in a remote solar PV facility, the majority of small-scale embedded generation (SSEG) occurs on site. Having either a stable roof or a suitable piece of land is an important consideration when writing up your request for solar quotation.

Do: Get a reputable company to carry out your industrial solar installation

The most important part of your decision will be based on getting a reputable company to build the industrial solar installation. This means choosing a company with a solid track record of solar projects, particularly in industrial facilities. The chosen company should be able to get good prices on high-quality solar components such as modules; design efficiently and thoroughly, and carry out construction safely and within the budget and timeline.

If you’re opting for a solar PPA option – where you don’t own the solar PV facility but simply buy the energy that it generates – you’ll want to ensure that the company you choose has sufficient available finance to build and maintain the system. Making sure that the company has credentials to stick around for the full term of the PPA is important. Make sure that the solar PV service provider can meet basic requirements, such as:

Design credentials. Does the company have the relevant design experience and credentials to effectively design a PV system for your site?

Adherence to minimum standards. In South Africa, this includes adherence to all relevant SANS codes, and ensuring that items such as wind load calculations are carried out according to SANS standards

Compliance with Municipal and National electricity standards municipal/eskom standards, including carrying out the relevant application processes to ensure that the PV system is legally compliant (such as Small Scale Embedded Generation (SSEG) applications)

Ensuring that a Practicing Engineer (Pr. Eng) is able to sign off on the system design and construction, yield estimation accuracy,

Qualified site supervision, and construction that complies with all Occupational Health and Safety standards

Do: Compare Apples with Apples

Getting comparative quotes is always recommended: it helps you to compare different solar PV companies and pricing, which helps to make a better decision. However, make sure to compare apples with apples when comparing quotes. It is important to consider that different PV companies structure their pricing in different ways, so be sure you understand exactly what each company is offering before comparing their pricing.

When comparing proposals from various companies, consider the following:

Equipment selection: the selection of tier 1, quality equipment will likely push the price up slightly, but it will mean that the system is better able to perform over its 25 year lifespan.

Inverter and panel derating characteristics: the derating of inverters and panels will affect the ability of the PV system to produce power over time

The sizing of the PV system: Is is optimally sized in order to meet your load requirements? A system that is too large or too small won’t save you the optimal amount of money. A slightly higher AC-DC ration will also affect price.

Lifetime savings and guaranteed savings: make sure you compare these two metrics, as the initial EPC price might differ but offer more in the way of lifetime savings, etc.

Total guarantee/warranty package, insurance and liability: what parts of the system are insured and have warranties? This will affect the costs of upkeep and maintenance of the system.

If you are thinking of entering into a solar Power Purchase Agreement (eg. buying solar energy directly), consider the following when comparing quotes:

The length of the PPA. Generally, the longer the PPA, the more affordable the tariffs will be. The length of the PPA will need to suit your business’s needs over the long term, considering things like whether the business would like to take ownership of the PV system.

The tariff escalation. At a first glance, a PPA tariff might appear higher, but it will have a lower escalation throughout the length of the PPA. Understanding the escalation is important to consider

Any upfront payments – again, a lower tariff might be because of a large upfront payment, so it is important to consider when comparing quotes. This is also the case with any bullet payments during the term or at the end of the PPA.

Whether insurance and part replacement is included in the tariff. Again, a lower tariff might have excluded these items, making the costs more over the long run.

Forex – how forex is calculated and included on the agreement will affect the price.

Don’t: Delay the solar procurement process

As much as it is important to practice due diligence when procuring solar PV, delaying the process unnecessarily is also seriously detrimental to the solar PV process. Solar PV savings start from day 1 – meaning that delaying the process is also delaying the cost savings. If the process is delayed, there could be unnecessary complications and expenses, such as

Availability of the construction team and build schedule – most companies have tight timelines and their availability could mean that the process is further delayed if your project is not booked into the build schedule timeously.

SSEG applications – delaying choosing a solar PV provider can result in a delayed SSEG application, which can result in delays to switching the PV system on (and thus benefiting from the clean energy that it provides!)

Structural assessments – delaying the procurement process can also affect the structural assessment process, which is an essential part of rooftop solar PV systems. This can result in an overall delay of constructing the project.

At the end of the day, the solar PV system will save your business significantly in terms of operational costs. However, there is also significant benefit in terms of environmental savings. Keeping track of the carbon emissions savings is an important way to acknowledge the value of the solar PV system.

Making sure that you have a competent Operations and Maintenance Service Partner will ensure that you can keep track of the relevant cost savings on a monthly basis and ensure that the plant is performing optimally. This can help to diagnose and solve any issues early, saving money for your operations.

If you have opted for a solar PPA, ensure that your partner provides you with carbon emissions savings with your monthly invoice, so that you can use the data when calculating your overall carbon savings. Solar PV is a choice that not only saves money – it is a conscious choice that ultimately will sustain generations to come. It’s something to be proud of, and use in your marketing strategy.

In conclusion, solar installations are useful for industrial facilities. Saving costs and carbon, they are a surefire way to increase cost savings. Following the above dos and don’ts will ensure that your solar installation is ultimately the right fit for your business.

We’ve spoken previously about the value of obtaining O&M services for solar systems on commercial and industrial property. O&M is a key way of ensuring that solar plants perform optimally, reducing energy system downtime. Choosing the correct O&M service partner will help to provide essential services and personnel for the ongoing operation of the solar PV plant. As such, it’s important to choose the right service partner who will make sure the system is running smoothly, maintained regularly, and monitored remotely to ensure that the expected financial savings are secured.

Why is appointing an O&M service partner important?

Financial: appointing an O&M service partner means that the financial returns of the system can be secured. The earlier that any issues within the solar system can be discovered, the quicker they can be resolved, reducing downtime and associated costs.

Safety: having an O&M service partner in place can ensure that safety hazards, such as fire and electrocution hazards, are avoided in advance. An O&M service partner should be able to see real-time system production and coordinate routine maintenance visits that will be able to prevent a host of safety hazards.

Component longevity: having an O&M strategy is also a good way to keep track of each component within a solar PV system. This becomes important as the system ages, as different components will have different warranties and replacement costs.

How to choose an O&M service partner

There are several points to consider when deciding on this. For example, does the service provider commit to performance guarantees, and what is their mechanism for ensuring your plant’s performance? In order to ensure service delivery, a performance guarantee will provide peace of mind that if the system underperforms, financial compensation will be provided.

Other points to consider include making sure that the promised Maintenance Schedule is comprehensive and can be adapted to the specific solar PV system. If your solar PV system is on a rooftop in an industrial area, for example, it may require more frequent cleaning; or if it is a carport structure, it might require other checks relevant to the structure. It’s important that the O&M partner understands these nuances.

Other important components of the O&M service are reporting tools and software. Having great maintenance but no way of accessing relevant reports, for example, would affect the overall value of the O&M service provided. Feel free to ask for a demonstration of the software, or an example of the monthly report that you will receive when you sign on with an O&M service partner, in order to understand if their methods of reporting are relevant to your system.

Do you know the warranty length and conditions for each of the different solar system components? Ensuring that your O&M provider is experienced in managing warranty claims, replacement of equipment, and arranging of logistics for repairs or replacements of components will be key to saving you money and reducing downtime. Understanding which components are under specific warranties will ensure cost savings, should they need to be replaced.

What is included and excluded from a typical O&M contract

Once a relevant O&M service partner is chosen, it is important to sign an O&M service contract to ensure that both parties fulfil their duties on a regular basis. This is an essential component that will ensure that the system is maintained with consequences for the service partner, should they not provide adequate, timely services. It will also protect the performance guarantee of the solar PV system, ensuring that should the system underperform, the business will be financially compensated.

Make sure the contract includes the following clauses:

Duties of contractor

What exactly will the O&M service partner provide on a monthly, quarterly, bi annual and annual basis? What is excluded?

Liability and termination

Who is liable for various scenarios? When should the contract be terminated and under what circumstances?

Breach of contract clause

What constitutes a breach of contract for either party, and is there provision for relevant penalties?

Governance of relationship between employer and contractor

How will the relationship between yourself and the O&M partnership be governed and altered in the future, if necessary?

Site-specific details

Things such as the site performance guarantee, when payment should take place, the specifications of the solar plant and the outline of maintenance specific to the site should be detailed

Reasonable inclusion

What is reasonable to include in the contract, and what is not included in the contract?

https://i2.wp.com/sola.africa/wp-content/uploads/2018/11/Sola-Future-Cavendish-ReWild-TV-Alistair-Daynes-12.jpg?fit=4898%2C3265&ssl=132654898SOLA Editorhttps://sola.africa/wp-content/uploads/2019/05/SOLA-Blue-Logo-323.pngSOLA Editor2018-11-29 11:31:012018-11-29 11:34:08O&M service contracts 101: how to choose an O&M service provider